Coming into the 2012 Summer Olympics, NBC expected to take a loss on the coverage, given the $1.2 billion it paid for the U.S. rights and the high cost of production in London.
But on parent company Comcast Corp.'s conference call Wednesday to discuss second-quarter earnings, NBCUniversal CEO Steve Burke said the company would break even. He said ratings are up compared with the Beijing Games in 2008, even though the company had expected a plunge.
Here's a transcript of the remarks:
QUESTION: On the Olympics, it's obviously a really great promotional platform. It seems to be going as well as, if not better than expected. Could you just talk to us about how you expect to benefit both short and longer term?
RESPONSE: We are five days into a 17-day event. So it's by no means concluded at this point, but we are off to a very, very successful start. The first point I'd make is that even before the Olympics started this year, we were over $100 million ahead of our ad sales goal. So there was a lot of demand, I think, for the time and we booked over $100 million more than our plan and more than we ever had booked before.
Now that the Olympics have started, the second positive variance, if you will, is in ratings, which are way up versus forecast. We thought when we did the forecast for London, that Beijing was sort of an atypical high-water mark. Beijing had some very interesting characteristics: Michael Phelps swam live during prime time, gymnastics was live. And so what we did was we went and looked at Athens (the Olympics in 2004) and really budgeted closer to Athens than Beijing.
The reality is, if you take the first five days at London and you compare them versus Beijing, we projected to be down 20 percent versus Beijing and we are actually up 9 percent.
The reality is we're up versus Athens 26 percent and we are about 30 percent higher than our estimate.
So really, ratings success pretty much across the board. All of you who follow this fragmented media landscape know how atypical that is. We think that it's because of the way that we promoted the Olympics during the hundred days leading up to the Olympics. We think a lot of it is due to all of the efforts inside NBCUniversal, which we call Symphony (a cross-marketing initiative) and also things that we have done with Comcast Cable. We also think for the first time we have a strategy that embraces broadcast, cable and digital. So we have a lot of exposure, all leading up to these great numbers in primetime.
When you boil all of that down, when we were doing due diligence on NBCUniversal, one of the issues the company had was: Every two years NBC Universal was losing a lot of money on the Olympics. We think London is going to be right around break-even, and there was a time when we thought London would be as negative as $200 million. So on a cash-on-cash basis, forgetting purchase-price accounting and everything else, we are way ahead of where we thought we would be.
At the same time, if you look at the benefit to other parts of the business, we are going to do a few things very unique in terms of launching the fall prime-time schedule for NBC. We've got some shows literally launching, for example, next Wednesday. We are doing a new show called Go On, commercial free, right out of the end of the Olympics. Also, obviously, the Olympics are a chance to showcase our news properties and other parts of the company and really build up our sports cable channel.
So I think now that we feel the (profit and loss balance) for the Olympics, per se, is about break-even, we feel it's clearly something that's going to benefit our company very broadly.